Case-Shiller, CoreLogic Updates on Home Sales

The latest Case-Shiller indexes are out, and they point to smallish increases in the prices of houses nationwide. The National Index has been moving sideways for the last six months or so, with year-over-year increases about the same—4.2 percent—as they were in February, which is the end month of the latest Case-Shiller report.

In October 2013, the National Index was up 10.9 percent compared with a year earlier, which in retrospect looks like the high point of a post-recession bounce. Fortunately, conditions weren’t ripe for a new housing bubble, so despite low interest rates and pent-up demand for housing, prices haven’t bubbled up unsustainably again.

That’s especially true when prices are adjusted for inflation (Case-Shiller uses nominal values). Home values are roughly back where they were in 2003 when inflation is taken into account. When you graph real prices over the last decade, the mid-2000s show a Matterhorn-shaped pattern of increases. Current real prices are nowhere near that peak—by contrast, prices are about 21 percent lower. That may be just as well, since a return to such a peak would be no more sustainable today than it was a decade ago.

In a separate report that brings more good news for the housing industry, CoreLogic reports that distressed housing sales—classified as REO and short sales—accounted for 13.5 percent of total home sales nationally in February, a 3 percent year-over-year decline and a 0.8 percent decrease from January (though distressed sales’ share of overall home sales tend to drop in the winter). In any case, this February’s distressed sales share was the lowest for any February since 2008. That is yet another sign that distressed properties are much less of a drag on the residential market than they used to be.

Clarification for Tuesday’s Economy Watch: Citing walkability as a factor in Expedia’s move to Seattle was incorrect; the company didn’t publicly mention that as a reason for the move. Economy Watch regrets the error.

The main thesis of the column seems solid, though: property values in more walkable areas tend to be stronger than values in less walkable areas. Also, Bellevue, Wash., is undoubtedly among the nation’s more dynamic real estate markets, regardless of its various Walk Scores (scores for Bellevue’s neighborhoods differ).